Yahoo! Inc. (YHOO) boosted its stock-buyback plan by $5 billion, returning more cash to shareholders as Chief Executive Officer Marissa Mayer seeks to revive growth at the largest U.S. Internet portal.
Yahoo will also sell $1 billion in convertible debt maturing in 2018, in a private placement, the Sunnyvale, California-based company said yesterday in a statement.
Mayer’s turnaround has focused on acquisitions of smaller technology companies that can add to the company’s talent pool or reach new sets of users. The buyback authorization is the latest since Yahoo agreed in July to repurchase 40 million of its shares from Third Point LLC, run by activist investor Daniel Loeb. Yahoo sold half its stake in Alibaba Group Holding Ltd. last year and said it would return most of the $3.65 billion in proceeds to shareholders.
“This is a prudent move by management as the company works to turn around its core and return to revenue growth,” Robert Peck, an analyst at SunTrust Robinson Humphrey, wrote in a note to investors. Peck has the equivalent of a hold rating on the shares.
Yahoo rose 2.9 percent to $35.62 at the close in New York. The stock has climbed 79 percent this year, more than triple the increase for the Standard & Poor’s 500 Index.
The authorization increased to $5.3 billion total, Sarah Meron, a spokeswoman for Yahoo, said in an e-mail. Yahoo has already repurchased $5.3 billion in stock since January 2012, including $1.7 billion in the third quarter, the company said on its earnings conference call on Oct. 15.
Separately, Mayer spoke yesterday at Salesforce.com Inc. (CRM)’s Dreamforce conference in San Francisco, where she announced plans to hire a head of design who will report directly to her as part of the company’s push to create appealing products.
The senior vice president of design will help the company create apps and Web pages that target the “core essence” of what users want, she said. Mayer said she has been joining Yahoo product managers on trips to countries including Israel, China and Japan to study how consumers and advertisers make use of the company’s products.
“Yahoo, like a lot of companies, is a company that needs to reinvent itself,” Mayer said. “You shouldn’t design for the expert user.”